Choose the right structure for your social enterprise

A Community Benefit Society (CBS) conducts business for the benefit of the community. Profits are not distributed among members or external shareholders, but returned to the community.

How Community Benefit Societies operate

Key characteristics of Community Benefit Societies include:

• They are set up with social objectives to conduct a business or trade.
• They are run and managed by their members.
• They must submit annual accounts.
• They can raise funds by issuing shares to the public.
• They can be established as charities, providing they have exclusively charitable objects that are for the public benefit, allowing them to raise capital through public grants and charitable trusts. If approved, they're known as exempt charities - reporting to the Financial Conduct Authority (FCA), not the Charity Commission.

Difference between a Community Benefit Society and a co-operative

Community Benefit Societies are not to be confused with co-operatives:

• Co-operatives operate for the mutual benefit of their members and may or may not be a social enterprise, depending on their activities and how they distribute their profits. Community benefit societies reflect commitment to the wider community, with profits being invested back into the business.
• Co-operatives cannot be established as charities. Community benefit societies can be established as a charity as long as it has an asset lock.

The Financial Conduct Authority (FCA) provide an overview on Co-operative and Community Benefit Societies.

Community Benefit Society: registration and costs

To register as a Community Benefit Society, you must demonstrate your social objectives and your reasons for registering as a society, rather than a company.

The FCA has made the decision that from 2019/20 fee year, registered mutuals will no longer pay annual fees - the FCA provides further guidance on the registration process.

If you want to start a Community Benefit Society, you should seek legal advice, particularly if creating your own rules. See choose a solicitor for your business.

Asset locks

An asset lock is a way of protecting the assets of a company or society so they can't be transferred to private individuals or other companies. Charitable CBSs must have an asset lock. Non-charitable CBSs can apply an asset lock, which protects their assets for the future benefit of the community.